Falling pound gives a lift to farmers’ support cash

Scotland’s farmers will see a boost of around 5 per cent in the exchange rate used to calculate their direct farm payments in 2017 it was announced yesterday – due to the fall in the value of the pound.

With the exchange rate set being based on the average of the European Central Bank rates over the month of September, the figure was confirmed last night to stand at €1 = £0.89470 – up from £0.85228 in 2016.

The Scottish Government said that with three quarters of producers taking their basic payments in sterling, the decision would affect around 16,400 farmers.

Following the announcement, rural economy secretary Fergus Ewing said that farmers and crofters would also receive a letter shortly outlining how to apply for this year’s national BPS and greening loan scheme which would allow the payments to be made.

Those eligible would, he said, receive 90 per cent of their entitlement in the first two weeks of November, up to a maximum of €150,000, as had been announced in the recent CAP stabilisation plan.

“I hope that confirmation of the exchange rate will provide farmers and crofters with some degree of certainty that will enable them to plan for the year ahead and continue to drive forward the rural economy,” said Ewing.

And while the European Commission has proposed a reduction of 1.39 per cent on all direct payments in excess of €2,000, a similar figure was borne by farmers last year. Commenting on the announcement, NFU Scotland’s director of policy Jonnie Hall said that the rate reflected the further weakening in sterling against other currencies, a process which had started after the referendum backed leaving Europe in June 2016.

“The 2017 rate is based on the average exchange rate across the whole month of September, the third year this has happened, and the 5 per cent figure represents a further increase on top of the 17 per cent increase in the value of the euro seen in 2016,” he said.

However he added a cautionary note: “Although the weakening of sterling is good news for support payments and strengthens the competitiveness of UK exports, the downside can be higher priced imported inputs such as animal feed and machinery.”

Hall said that the recent lending figures showed that farmers and crofters were likely to need every pound and euro in what remained “a very difficult year for all sectors”.

“Given the challenging situation they are facing with low prices, increased input costs and challenging weather, this – along with today’s announcement that loan scheme letters are being issued – will be a welcome boost at this time of year,” he added.